1. Introduction

Successive governments have put forth various efforts to create balanced regional development. Such efforts come in a form of diverse regulations on metropolitan area and financial investment on nonmetropolitan area. In particular, the recent Participatory Government selected the ‘Balanced National Development’ as a major Government agenda, and has pushed forward the following: The enactment of the Special Law on Balanced Growth, the establishment of the Special Account for Balanced National Development, the establishment of the Regional Innovation System, the reinforcement of the NURI (New University for Regional Innovation) Project, and the construction of the Multifunctional Administrative City.

A number of problems have been pointed out so far with the Balanced National Development policy. In particular, the possibility of various regulations weakening the competitiveness of the whole national economy has been extensively discussed. However, a similarly important problem is that fiscal investment driven by the central government might deepen the local government’s dependency on the central government and weaken its independence. Many of the Participatory Government’s projects aiming to improve independence of local governments have been led by the central government at all phases of planning, execution, and assessment so that the local governments’ ownership and accountability have not been secured. Even some ministries seem to use the policy as an opportunity to expand their projects and budgets. Under such conditions, the will and policy capacity of local governments to contribute to regional development will only weaken and under the pretext of a balanced development, the authority of the central government is only likely to be strengthened.

In the future, in line with the advancement of political democratization, the central government will have no choice but to be more responsive to the demands of local governments. No matter which government will come into power, ‘balanced development’ is expected to be the essential policy target of the government. The Pragmatic Government, a successor to the Participatory Government, also seems to consider balanced growth as an important policy agenda. However, if the policies continue to be implemented with the problems unsolved, it is hard to expect that the ultimate independence of local governments will be secured.

This study attempts to suggest a measure to redefine the policy direction and strategy for regional development based on the acknowledgement of such problems. The critical arguments are as follow.

First, it is more appropriate to pursue a ‘regional development’ than ‘balanced development.’ In other words, the obsession with regional equity is not desirable, while discriminative support is effective according to the success potential of the region, and the regulation on metropolitan area should be eased to a large degree.

Second, of particular significance for supporting local areas is to draw a clear line of the roles between the central and local governments. By appropriately applying either decentralization or centralization in sectors such as R&D, social welfare, and education, the role allocation can be clearly defined which will constitute the first step towards securing the ownership and accountability of local areas and nurturing their will for development and policy capacity.

In order to reach the above conclusion, the following chapters in this study present the theoretical and empirical analyses, review case studies of foreign countries, and then suggest specific policy measures on major sectors.

2. Redefining Goals and Strategies of Regional Development Policy

Regional development policy that involves political, economical and social factors, and in order to enhance the effect and receptiveness of the policy, a process that produces social consensus through in depth analysis and discussion embracing all perspectives is highly essential. To that end, a procedure to verify the correctness of the logic behind the theory each perspective insists must be conducted beforehand. In such context, the economic analysis of regional development policy is of great significance.

Korea’s regional development policy had more of a tool like characteristic for economic development during the period for industrial coalition, but since then, efforts to bridge the gap between metropolitan are a sand nonmetropolitan areas have earnestly begun. And, after the late 1990, balanced development among regions was one of the major policy agenda that was actively implemented.

From an economic perspective, the regional balance policy of today, particularly the policy targeting to bridge the gap between metropolitan and nonmetropolitan areas seems to have some problems. Above all, the agglomeration phenomenon of economic activities moving toward the central area is a natural phenomenon, and not a problem itself. But, when this phenolmenon becomes excessive or begets externalities, government intervention is needed. In order to stipulate that the current conditions require artificial spatial reconfiguration through government intervention, a more precise analysis is needed. According to the international comparison, it is indeed true that the population and income concentration of Korea are high, but it is difficult to say that there is a significance gap among regions in terms of income inequality or other living conditions.

It is also necessary to recognize that a balance development is not generally compatible with either growth or improvement of national competitiveness. According to the recent theoretical and empirical analyses on the experiences and case studies of regional policies of foreign countries show that balanced development in a form of artificially decentralizing both facilities and resources in the central area is a policy goal that cannot be implemented simultaneously with growth policy. Not only that, when improving income distribution is a policy goal, it is possible that balanced regional development will not serve as an effective policy tool but rather it will worsen the income distribution. This is because even in the affluent areas there are poor people, and vice versa.

Therefore, the regional development policy in the future needs to move toward a way to encourage local areas to improve their self dependency rather than to pursue regional balance by artificially relocating economic activities. Presently, when most of the authority for local projects belongs to the central government, local governments tend to exert extra efforts to attract more budget than to enhance their own capacity. Under such conditions, independent growth of local governments is hard to expect. Therefore, it is recommended that while local governments should take the ultimate responsibility of creating growth engine and income base, the central government should play the role of a constructive supporter for the development of local areas, for example, by providing information and human resources for effective designing and execution of local projects. To that end, it is necessary to practically help local governments improve their independence through substantially transferring the rights to financial sources and their disposal to local governments.

Creation of independent growth engine of local governments through the improvement of autonomy and accountability seems to be the key to enhanced competitiveness and sustainable growth of Korea which currently is met with fiercer competition among countries under the rapid transition into a knowledgebased society in line with the trend of globalization. A detailed and specific strategy to handle this situation should be prepared in a multifaceted way.

3. A Study on Regional Economic Gap

It has been generally recognized that the regional economic gap has continued to widen and particularly so in the gap between metropolitan and nonmetropolitan areas. In order to close this gap, policies relating to locating in the metropolitan areas and supportive industrial policy for local areas have been pushed forward simultaneously. However, it is necessary to discuss and analyze how to view this regional economic gap prior to implementing these policies.

A close look at various statistics, such as local accounts, shows that the productivity gap among regions continues to expand since the 1990s, but this is understood as the consequence from the industrial specialization of local areas being engaged with the structural changes initiated by economic development. Despite the widening regional gap, there are few tendency found that within the same industry, the gap fluctuation between different regions widens. As the light industry started to wane since the 1990s, the productivity of the region where a large heavy and chemical industry complex is located started to grow rapidly. Also, with the decline of the manufacturing industry in large cities, the productivity gap between large cities and other areas has widened. Not only that, the growing proportion of the service industry in the economy has changed the nature of the metropolitan areas from service oriented to consumption-oriented, but the service production advantage of Seoul has grown further since the city is highly populated due to its advanced transportation system and knowledge based services and also due to the fact that where education, research and administration are traditionally conglomerated.

When it comes to the problems of regional gap between metropolitan and nonmetropolitan areas, it is hard to find tendencies that situations in nonmetropolitan labor markets are worsening compared to metropolitan labor markets although this is not clear in the case for professionals. On the production side, it seems that an industrial division is taking place with one side, the metropolitan areas with greater advantage in the labor concentrated light industry and service industry and with the other side, the nonmetropolitan areas with greater advantage in the heavy and chemical industry.

Both in terms of income and consumption, the status of metropolitan areas continues to hold a dominant position, which is due to their advantage in various strategy, consumption and cultural service production based on educational, medical and cultural infrastructures. In particular, products being produced in non-city areas while consumed in cities is becoming the popular pattern now, and when it comes to the role sharing between cities and non-cities, the role of cities as the production base for the service industry rather than the manufacturing industry has been more emphasized. But, still large cities in nonmetropolitan areas tend to have a greater service inflow from Seoul than outflow, showing inadequate capacity in service production. In this regard, it is necessary to interpret a gap problem between metropolitan and nonmetropolitan areas as their gap in the service industry, not the manufacturing industry.

Production advantage of the metropolitan areas is due to the concentration of institutional functions in the capital city, but more to the reason that the metropolitan areas are populated enough to actualize diversity and economy of scale in terms of service supply and demand. Such service advantage of the metropolitan areas has been further strengthened by the expansion in transportation infrastructure that helps shorten the time distance between regions.

In this regard, from the perspective of new economic geography, the regional economic gap can be regarded as a natural phenomenon caused by industrial specialization among regions. This does not seem to be a matter that must be resolved in accordance with the logic of equality. Therefore, the attempt to fill the regional economic gap through regulations or subsidies is not likely to bring a desired result and also seem economically inefficient. The effect of economies of agglomeration and scale tends to increase the concentration of industry in certain areas to continue for a long time through a domino effect. This can be understood as the source of competitiveness, not as the cause of inefficiency from the perspective of the national economy as a whole.

4. Europe’s Regional Development Policy and Implications

In many other countries as well as Korea, the regional gap in economic activities has been continuing, although in different degrees. Each country, according to the gap of regional economic activities and their political understanding of regional equality, has pushed forward various regional development policies. In particular, the European Union and each European country have long been implementing the regional development policies in order to narrow the regional gap in economic activities. The regional development policy here refers to the policy that intends to deliberately influence the regional allocation of income, population, production activity, social infrastructure, government budget and political power.

Classical economics argue that the regional economic gap is just a temporary imbalance which will be alleviated in a long term when a factor such as free mobility of production is secured. On the other hand, new economic geography points out that due to a large impact of positive externalities like agglomeration economies, when the law of increasing marginal productivity takes effect, a discriminative structure of economic space is likely to be induced, where the free mobility of production is divided into the core and periphery.

The European Union in the early stage had continuously pursued the classical economics based understanding that an expansion of market would raise the productivity and the free movement of production would bridge the regional gap. But, in actuality, the regional gap widened, and the European Union which aims at not only economic integration but also political integration has used policy methods, such as structural funds, in order to narrow the regional gap. However, such support oriented policy made some contributions to narrowing the economic gap between countries, but failed to fill the gap between regions within the Union. This is now evaluated to have distorted the efficient allocation of resources.

Meanwhile, Italy, France and the UK have implemented several policies, such as development subsidies for underdeveloped areas, incentive policy like tax inducement, large-scale public expenditure policy like welfare and income support, and large-scale fiscal expenditure policy to secure social infrastructures. However, these regional development policies are considered not only economically inefficient but also a failure in developing the underdeveloped areas by increasing dependency of backward regions on fiscal expenditure.

Therefore, the regional development policies of the EU and European countries have been since then transformed from a top down policy of designating depressed regions and offering them several supporting programs to a different direction where the creation of endogenous growth base is emphasized by focusing on regional distinctiveness, strengthening the capacities of region and regional organizations, reinforcing the connection between local communities and industries, and consolidating cooperation between the public and private sectors. Also, policy goal is shifting from simply focusing one quality to pursuing it together with efficiency.

The backgrounds for these goals, size, establishment and implementation of regional development policies of the EU and European countries can be different from that of Korea. In addition, a policy is not simply selected because of its expectation effect, but mostly due to the present economic conditions and political understanding. The changes in the global economic environment where countries have to compete in order to attract multilateral companies or high technology based industries have affected the regional development policies as well. Nevertheless, the accomplishments and changes of regional development policies within Europe should be seriously taken into account when considering Korea’s regional development policy.

5. Transforming Special Account of Balanced National Development into Block Grant

When it comes to role sharing between the central and local governments, fiscal equivalence, economies of scale, regional preference heterogeneity, mobility of taxpayers, and competition among local governments are considered. The most fundamental of all is the principal of fiscal equivalence, under which it should be local governments that collect the local tax from businesses which bring benefits to the local areas, and it should be the central government that collects national tax from businesses which bring nationwide benefits. Under this perspective, it is appropriate that regional development policy should be the responsibility of local governments.

However, in reality, the political and social responsibility on regional development is not an agenda that the central government can simply abandon, so it has carried out a large number of regional development projects. One of the significant tools of Korea is the Special Account for Balanced National Development, but there are several problems found with this special account, such as its unclear identity, resource allocation with the focus on equality, government grant taken out from the National Treasury for local projects, insufficient ex-post evaluation, the central government-led projects, and complex and rigid business structure. In particular, as the projects are operated mainly by the central government, the local governments loose sight of the awareness in participation and responsibility. Under such conditions, it is very difficult to nurture growth potential of local areas. Not only that, since several different central ministries have implemented a large number of projects with similar goals, there is not enough room for local governments to flexibly adjust their financial resources. Also, as long as the competitive grant programs remain unchanged, there is little room to encourage creativeness and experience. Hence, there is a need to transform the special account into a block grant in order to solve these problems.

The grants that the central government provides to local governments have largely three purposes: Finance, subsidization, and equalization. The grants also come in a variety of forms. The special account, on the side of service, has a strong characteristic of resource provision while having a strong characteristic of purpose oriented discretionary grant (particularly, resource-sharing grant), on the side of which type. However, in order to induce cost saving efforts from local governments, it is the block grant that is most suitable. In addition, block grants allow local governments to flexibly plan and implement projects.

When converting the special account into a block grant, both the central and local governments need to make efforts as follow: First, the central government must clearly state the policy goals of the grant and also establish a performance index to measure the accomplishments of local governments. Second, each local government must establish its goals, strategies and project plans as well asset performance goals, while the central government should examine the project plans and overall capacity of local governments and decide on the propriety of fiscal support. Third, the central government should allocate its financial resources to areas that are expected to have the highest marginal productivity of fiscal transfer. These areas generally will be the ones with high demand for development and the ones equipped with high-quality capacity. Fourth, the central government should monitor whether local governments have achieved their initial goals as promised and executed the budget lawfully. In addition, the central government should continuously conduct program evaluation and make consistent efforts so that the performance of local governments will improve.

Introduction of such block grant in Korea might contribute to alleviating general problems of the intergovernmental fiscal coordination system. However, ultimately, in order to enhance the independence and accountability of local areas, it seems that the price function of local tax must be improved while transferring many of the functions currently implemented by the central government to local governments within the scope that fits the principle of fiscal equivalence, and reforming the intergovernmental fiscal coordination system in accordance with the principle.

6. Political-economic Analysis of Local Autonomy System

The primary responsibility of local development should be laid on local governments, local politicians and local citizens. When they exert efforts to maximize the efficiency and effectiveness of local fiscal expenditure and to seek for new measures for local development, the advancement of local areas can be guaranteed. In this context, the current local shared tax and local tax systems need to be reformed, and local politics require a competitive election system.

In the case of local shared tax, there is a large incentive for local governments to use all of their local shared taxes, and they can flexibly spend this shared tax on any projects including the ones that are considered wasteful. In addition, the share of local citizens’ tax burden is so small that local politicians do not feel responsible or have to answer to local citizens when spending tax money on projects. Also there is less incentive for local citizens to thoroughly monitor projects that are not financed with their tax money. Therefore, from a theoretical perspective, the local shared tax is highly likely to cause problems in expenditure.

Given the above conditions, in order to activate decentralization and promote efficient development of local areas, the size of local shared tax system needs to be reduced, and the national tax needs to be converted into local tax. This should help in firmly establishing the principle that ‘financial resources to be spent by local government should be raised by that local area.’ Only when the authority and responsibility of local governments are strictly prescribed, and allowed corresponding fiscal autonomy, wasteful government spending will stop.

Introduction of competitive election system is also a significant issue. The current top-down style of the nomination systemshould be changed to a bottomup, in otherwords, a competitive election system. If a local politician is proven to have an adequate capacity he or she should be given the opportunity to move forward to central politics through the competitive election system. Also, the incumbent lawmakers in local electoral districts will be encouraged to put in more efforts into regional development when competing against local politicians. In this regard, competitive election is an efficient system for the development of national politics, and more so for regional development. The system also tends to reduce the rent seeking behavior of local politicians by providing incentives for entering central politics. Also, a number of competent and qualified people who wish to participate in central politics should be encouraged to participate in local politics, which in the end will bring collateral effect of contributing to the development of local areas. It can also eliminate career worries of competent heads of local governments and inspire their innovative will. Not only that, the selection effect on local lawmakers and politicians will work to dust off immoral and incompetent competitions on the political stage. The introduction of competitive election system is of great significance in that regional development is possible through the virtuous structural cycle of central and local politics.

In order to guarantee the above effect, a strict auditing system to monitor the use of local tax must be adopted so that the transparency of local finance should be strengthened and also the benefits given to central politicians should be limited. Since the benefit is excessive but the channels to become central politician are limited, in reality, there are many hopeful politicians focusing only on central politics. Only when these problems with the current system are resolved the increasing number of competent people will work towards improving regional development, and also thanks to them, the base of regional development will be further consolidated.

7. Regional Innovation and Autonomous Budget Management System

Faced with the era of knowledgebase economy in the 21st century, each country, in its own way, concentrates on activating new innovation system as the core capacity. For balanced development of local industries in the future, a new software type policy which could gradually nurture independent innovative capacity of related entities and their creativity is more important than a rapid hardware type policy like the creation of local infrastructures.

For regional innovation, the foremost necessary element is a greater awareness on innovation. General stakeholders in charge of stimulating regional economy should share the sense of community and the urgency of the crisis. They also should step away from an arrow closed-minded way of thinking and egotistic attitude and be equipped with an open-minded thinking structure.

In order for regional innovation to continually grow, it is important to supportappropriate funds for project execution in a stable and consistent manner. The crucial point in budgetary support is the dualism between benefit and capital.

Based on the awareness on innovation and stable budget support, a new regional innovation model needs to be established. The key to this model is trust, self-imposed responsibility, valid evaluation and supervision. However, the current conditions of regional management capacity are not yet adequate enough to be entrusted with the responsibility by the central government. A feasible measure for now is to complement the budgetary support system as a partial effort to improve policies, while generally maintaining the existing framework. The measures for improvement are as follows:

First, the budgetary support system by capital contribution should be selected strategically. This not only is effective in gradually nurturing regional innovation but also improving the efficiency of regulatory governance of regional innovation.

Second, several regional innovation projects run by the central government should be integrated and streamlined in a developmental way. A large number of currently in progress regional innovation projects have been competitively implemented by government ministries, which requires bold and government wide actions of reintegration and adjustment. If such immediate actions are not possible, the commencement schedules of regional innovation projects led by the central government should be at least simplified so that the transaction cost of unnecessary regional innovation can be minimized.

Third, it is necessary to reinforce the strategic planning capacity of the responsible innovation entities. The strategic planning function of the current regional innovation agencies of each province should be decisively reformed so as to establish a system which plays a leading role in necessary strategic regional innovation projects free from the intervention of the central government.

Fourth, there is a need to improve the institutional evaluation system of the responsible innovation entities. Starting with the comprehensive project structure evaluation focused on growth engine for regional development, it is necessary to adopt an institutional evaluation system that aims to maximize the capacity activation for creative regional innovation. Furthermore, the practice of using the results from the evaluation as a tool to determine the rank should be stopped, and the results need to be applied directly to help activate the creative regional innovation capacity.

Fifth, through this process, the responsible innovation entities should be further developed so that they become the centripetal force for the regional innovation activities. The most important factor in carrying out this role is the adjustment and liaison on NIS projects implemented in the region. To that end, it is very important to adjust and connect the NIS and RIS projects by the central government.

A success of the second regional innovation project based on the capacity of independence of local areas is up to the strategic selection of an innovation model such as this for a policy leap forward.

8. Defining the Role Sharing of the Government for Balanced Development in the Welfare Sector

For development in the welfare sector, the advancement of decentralization is of great significance. Due to the true nature of social welfare services which require a close attention to the people in order to understand their demands, a voluntary participation from local governments, communities and the citizens is very important. However, there are cases where pursuing national policy goals inevitably require the involvement of the central government as well as take into consideration the capacity of local governments. Hence, the process of pursuing decentralization should be understood as a process to settle balance between the positive and negative effects or to prepare supplementary measures in each stage.

A large-scale transfer of several projects led by the central government to local authorities without considering these issues has incurred problems of deteriorating the distinction between the roles played by the central and local governments while creating vagueness on accountability. The most prominent problem in the welfare sector is that private providers play a leading role in service provision and local governments are short of an instrument to control the quality and quantity of the service, and this is also mainly attributable to the lack of active intervention by the central government. All these indicate that pursuing decentralization does not necessarily mean neglecting the central government’s leadership, but it means that carefully planning and executing the standard, order, and timing is very important in local transfer.

The challenges of welfare sector and the problems of decentralization can be viewed as an accountability relationship between the central and local governments and also between local governments and local citizens. The central government is in charge of projects closely related to its policy decision, such as projects targeting the poor, but sometimes it is actually true that the local government in charge of the project is more effective since it has more detailed information concerning the region. In this regard, it is necessary to expand the block grant that considers setting the roles of both the central and local governments. The block grant is a way of imposing basic conditions on the grant in order to prevent excessive intervention from the central government while promoting independence of local governments, at the same time, and local governments will be held accountable for only the essential responsibility.

In order to secure the accountability of local governments for local citizens, it is important to improve the local government’s ability to manage service providers and the central government’s ability to manage the accomplishments of local governments. The local transfer of authority and accountability should not be the end, and concerted efforts are required to build the administrative, institutional, and human resource capacity, which would enable local governments to pay their duty to the citizens. As an effort to do that, it is necessary to improve the welfare evaluation of local authorities, which aims to create information on the efforts and accomplishments of local governments and then to distribute the information. Not only that, the establishment of evaluation criteria and contract relationship of private providers is also a pending issue to deal with.

However, prior to handling all these challenges, a long-term, step-by-step plan for decentralization should be prepared according to the necessary management function of the central government. In this context, the government projects need to be classified into three categories: Those that can be transferred immediately, those that cannot be immediately transferred but need to be transferred in a long-term period, and those that still require supervision of the central government after being decentralized. The projects transferred in 2004 need to be readjusted according to this classification. It is necessary to transform the decentralization revenue sharing system into a true block grant which strengthens the management function of local governments under less supervision by the central government, and this classification process should be conducted simultaneously with the plot of general institutional reform of shared tax and grant system.

9. Analysis on the Problems of Local Colleges and Policy Direction

The government has adopted several policy tools to tackle the problems of local colleges. These efforts should be based on a strict analysis on reality, and a sufficient consideration on the role sharing between the central and local governments.

The analysis of regional mobility of college graduates shows that it is almost impossible to include the graduates of local colleges(particularly four-year colleges and universities) into the workforce of that region. This is because one third of the college graduates find jobs in Seoul area and slightly above one-half in the metropolitan areas as shown on the statistics. Meanwhile, in terms of labor market accomplishments, such as income, size of the company, and the “fit” between one’s job and the major (specialization), a very large discrepancy is observed between the graduates from colleges located in Seoul and those outside Seoul. But, when the average score of the National Scholastic Aptitude Test at the time of college entrance is controlled for, the discrepancy is found to be reduced to a considerable degree. In the case of income, there are somewhat of discrepancy, but this only seems to reflect the characteristics of workplace. In other words, graduates with high scores on their aptitude test enter colleges located in Seoul and thus tend to find better jobs leading to income differences.

Such analysis result which confirms the importance of aptitude test scores suggests that in the labor market, one of the major reasons behind a lower accomplishment of the graduate from local colleges is due to a lower competitiveness of local colleges in attracting the brightest students. But, this should not be viewed as only an internal problem of local colleges. This is because the growth of local economies tends to haul the advancement of local colleges in that area rather than being the other way around. The agglomeration effect in Seoul where headquarters of large corporations and financial institutions gather is the factor that has elevated the status of colleges located in Seoul since this provides highly preferred job choices of graduates. When the competitiveness of college is significantly influenced by exogenous factors, such as the vicinity to Seoul, the effort being made by colleges alone would not be enough to improve the situation.

However, the central government, too, is not in the position to carry out countermeasure policies for such problems. The regionaldevelopment strategy boosted through supportive policies for local colleges, such asfinancial support, is not based on the persuasive and empirical grounds. It is true that college education is universal and that the government’s intervention in assisting local colleges to secure basic conditions, such astenure faculty and adequate facilities is necessary. However, the way of interventionshould not be a support only type. In order to improve the efficiency and effect of financial support, restructuring programs, including the merger and integration of insolvent colleges, should be underway prior to providing support.

In addition, when the policy is focused on education recipients? Local college students, and not on education providers? local colleges, the importance of regional gap in compulsory education (elementary and junior high schools) turns out to be much important as the gap between metropolitan area colleges and local colleges. Considering the educational gap before college entrance shown from the discrepancies of aptitude test scores among different regions, the imbalance between regions in terms of human resources is apparently derived from compulsory education, and not from college education. Therefore, there is a need to double the policy efforts to reduce the educational gap among different regions. In addition, given the current situation where it is difficult to find appropriate ex post facto policy measures to solve the problem of income gap between the graduates from metropolitan colleges and local colleges, it can be said that improving the environment for compulsory education in local areas is a growing necessity for bridging the educational gap among different regions.

10. Second Awareness on Regulations of Metropolitan Areas and Policy Switch

The core of the metropolitan area regulation is the Seoul Metropolitan Area Readjustment Planning, which regulates the location of factories, schools, large-sized buildings and facilities that induce population concentration in the three divided zones of the metropolitan area. Also, various overlapping regulations are applied, including the military facility protection area, greenbelts(restricted development area), special zone around Paldang area, reservoirs, and riparian buffer zones. The metropolitan area regulation is based on the premise that stabilizing the population through location regulation is an effective method to solve environmental pollution and traffic problems, and that restricting population concentration in metropolitan areas could lead to the development of nonmetropolitan areas.

The metropolitan area regulation, however, has not only failed to accomplish the policy goal of resolving density problems and contributing to the development of local areas but also has caused adverse effects such as undermining investment and production activities by companies and limiting the residential lands and leisure spaces necessary for the quality life of citizens in metropolitan areas, eventually leading to compromising the competitiveness of metropolitan areas.

The progress of the regulation on metropolitan areas has gone through several phases such as the problem recognition (the 1960s), policy formation (the 1970s), consolidation and promotion (the late 1970s~the early1990s), and policy transformation (the mid1990s). The economic and social conditions within and surrounding Korea has changed as well. Domestically, Korea’s industrial structure has been modified from the manufacturing centered to the service centered. The population growth has slowed down gradually and the increasing income level has raised the demand for a high quality residential service and leisure spaces. Externally, the global economic system is facilitating the competition among large cities. In particular, the intensifying competition among large international cities has left the UK, France and Japan to abolish or alleviate their outdated regulations on metropolitan areas as an attempt to strengthen their national competitiveness.

On the other hand, the nature of Korea’s policy for metropolitan areas has not changed. The Participatory Government has selectively alleviated some of the regulations, according to its needs, but it has implemented its metropolitan policies under the framework of a ‘balanced national development, ’while simultaneously sticking to the principle of ‘growth first for local areas, and systematic management later for metropolitan areas.’

The current government has pushed forward a reasonable reform of the regulation nonmetropolitan areas as a way to strengthen national competitiveness. The recently announced improvement measures on regulations over establishment, expansion and transfer of factories are the efforts leading to the reform.

The fundamental reform of the metropolitan area regulation is to eliminate the current metropolitan regulations and implement a policy switch to a planned management system for metropolitan areas, which enhances their competitiveness and supports a high quality life. Above all, it is necessary to completely abolish Articles in the Seoul Metropolitan Area Readjustment Planning Act with respect to zone classification and location regulation, while setting up a cooperative system among local authorities over the issues such as infrastructure investment in the metropolitan region, and efficiency improvement on land use. In addition, external effects such as environmental pollution and heavy traffic should be resolved not by location regulation, but by both direct and indirect regulations on actions that cause the corresponding impacts. In this way, internal problems within metropolitan areas should be dealt with by planning and price policies, while the regional development, apart from the metropolitan area regulations, should be implemented by practical decentralization and policy support.

If these fundamental policy transformation is not possible immediately, it is necessary to first seek ways for improvement within the current system and then to choose phased approaches. Priority reform agendas include creating industrial land within metropolitan areas, allowing the new establishment and expansion of high-tech plans, improving the operation of total pollution load management system, specifying the classification of zones, adopting a discriminative management system of zones, introducing the clearance development zone for resolving problems in the underdeveloped regions within metropolitan areas, improving the regulation on the development of houses and tour sites, improving the discriminative fiscal and tax systems for metropolitan areas, and streamlining the regional administration system of metropolitan areas.

11. Estimating Regional Development Indicators

When the extent of regional development is an important factor in allocating national budget, it is crucial to have a comprehensive and thorough review to assess the degree of regional development. A number of and various ongoing development policies for underdeveloped areas have respectively adopted such criteria of their own during the assessment process, which generally depends on the priori judgment of policy administrators or the expert opinions. And, no sufficient empirical analysis has been made, thus far on the propriety of the criteria.

The difficulties in such analysis are basically due to lack of consistent assessment with respect to the current conditions of underdevelopment. This study, in order to resolve such problem, conducted a government budget official survey in which respondents are asked to individually rank other regions? within the metropolitan cities and provinces-as to the extent of their development, and then it attempted to examine the propriety of the criteria based on the result of the estimation model for regional development indicators that could explain the ranking in terms of statistical significance.

Through various regression analysis models, the study found a statistically important combination of indicators, which involves the aging index (or the ratio of the aged population), financial index (or local tax), and hospital occupancy index (or the number of medical practitioner). These indicators were found in common in most models, and other variables such as population, industrial economy, welfare, and infrastructure, are also found statistically meaningful.

The feasibility examination of selected models revealed the problem that the development ranking of local authorities turned out completely different depending on which combination of indexes was applied. In other words, it is difficult to justify the cases where same variables are statistically meaningful in some models and not in others.

To solve such a problem, the study attempted to rank the development level based on the average ranking value produced by chosen analysis models. This method further improved the explanation of actual cases in reality, compared to the method of using the individual model to create the rank. However, it also has a problem of producing different analysis results depending on the scope that each model applies. Not only that, this approach is found to be difficult in achieving the primary goal of this study, which was to establish statistically meaningful indicators for regional development. The feasibility examination result showed that using the average value approach seems to explain the actual cases in reality as much as the current regional underdevelopment index of the preliminary feasibility study.

In other words, formulating regional development indicators through quantitative analysis does not seem to yield much improved results than this current method being used, which therefore means the current method is appropriate to explain the regional development index and the rank order. This index consists of population growth, aging index, financial independence, the ratio of manufacturing employment, the number of registered vehicles, road ratio, the number of physicians per capita, and urban land use ratio.

요 약

제１장 지역개발정책의 목표와 전략 재정립
　제1절 서 론
　제2절 우리나라의 지역개발정책 개관
　　1. 1970년~1980년대 후반
　　2. 1990년~외환위기
　　3. 외환위기 이후~현재
　제3절 우리나라의 지역 간 격차
　　1. 우리나라의 지역 간 격차에 관한 논의
　　2. OECD 국가와의 비교
　제4절 지역 간 격차에 관한 이론적 논의
　　1. 신고전학파 이론과 소득수렴
　　2. 누적적 인과관계모형과 중심부-주변부 모형
　　3. 내생적 성장이론과 인적자본
　　4. 신경제지리학과 경제활동의 집적
　제5절 향후 지역개발정책의 방향
　　1. 지금까지의 지역개발정책에 대한 평가
　　2. 향후 지역개발정책의 목표와 전략
　제6절 맺음말
　참 고 문 헌

제２장 지역경제력 격차에 관한 연구
　제1절 서 론
　제2절 지역경제력 격차에 대한 이론적 논의
　　1. 지역 간 경제적 불균등에 대한 근본적 논점
　　2. 지역 간 소득수렴에 대한 이론적 논의
　제3절 지역 간 경제력 격차에 대한 실증적 논의
　제4절 1990년대 이후 지역 간 격차의 확대에 대한 이해
　　1. 지역 간 격차의 추이
　　2. 일인당 GRDP 격차의 분해
　　3. 산업구조 변화와 지역 간 격차
　　4. 광역도시와 기타 지역 간의 지역 간 격차
　　5. 지역 간 일인당 소비의 격차
　제5절 제조업에서의 지역별 산업특화와 생산성
　제6절 수도권과 비수도권의 불균형에 대한 이해
　제7절 결 어
　참 고 문 헌

제３장 유럽 지역개발정책의 사례 및 시사점
　제1절 서 론
　제2절 유럽의 지역개발격차 현황
　제3절 EU의 지역개발정책
　제4절 이탈리아의 지역개발정책
　제5절 프랑스의 지역개발정책
　제6절 영국의 지역개발정책
　제7절 결 론
　참 고 문 헌

제４장 국가균형발전특별회계의 포괄보조금화 방안
　제1절 서 론
　제2절 중앙과 지방의 역할분담 및 정부 간 재정
　　1. 역할분담의 원칙
　　2. 중앙정부와 지방정부의 재정적 관계
　제3절 우리나라에서 중앙과 지방의 역할분담
　　1. 우리나라의 지방재정조정제도
　　2. 국가균형발전특별회계
　　3. 문제점
　제4절 지역개발 목적의 포괄보조금 도입
　　1. 포괄보조금의 해외사례
　　2. 국가균형발전특별회계의 포괄보조금화 방안
　제5절 요약 및 결론
　참 고 문 헌

제５장 지방분권제도에 대한 정치경제학적 분석
　제1절 서 론
　제2절 기존 연구
　　1. 이론적 논의
　　2. 실증적 분석
　제3절 모 형
　　1. 기본모형
　　2. 경선제도 모형
　제4절 정책적 시사점 및 향후 연구과제
　　1. 정책적 시사점
　　2. 향후 연구과제
　참 고 문 헌
　부 록

제６장 지역혁신과 자율책임예산관리체제
　제1절 서 론
　제2절 지역혁신정책과 예산제도
　　1. 지역혁신정책의 발전
　　2. 국가균형발전특별회계의 운영
　제3절 우리나라 지역혁신예산 관리체제 현황
　　1. 지역혁신 추진체제의 변화
　　2. 지역혁신예산 관리시스템 현황
　　3. 지역의 수요자 의견조사
　제4절 지역혁신을 위한 자율책임예산운영제도의 도입방안
　　1. 지역혁신 자율책임예산운영의 필요성
　　2. 지역혁신 예산지배구조의 전환
　　3. 전략사업구조와 운영시스템
　　4. 성과감독시스템
　제5절 맺음말
　참 고 문 헌

제７장 복지부문의 균형발전을 위한 정부 간 역할의 정립
　제1절 서 론
　제2절 복지부문의 분권화를 위한 책무성의 확보
　　1. 분권화와 책무성
　　2. 중앙정부와 지방정부 간 책무성
　　3. 지방정부 평가와 지역주민에 대한 책무성 관계
　제3절 우리나라 복지부문의 책무성 관계
　　1. 중앙정부와 지방정부 간 책무성
　　2. 지방정부와 지역주민 간 책무성
　제4절 시사점
　참 고 문 헌

제８장 지방대학 문제의 분석과 정책방향
　제1절 서 론
　제2절 선행연구와 분석자료
　　1. 선행연구와의 관계
　　2. 분석자료
　제3절 대졸자의 지역이동행태
　　1. 출생부터 직장까지의 지역이동경로
　　2. 지방대 졸업자의 취업지역 이동요인
　　3. 취업지역의 선택에 대한 지역 특성의 영향
　　4. 소 결
　제4절 대졸자의 노동시장 성과에 대한 지역적 요인의 영향
　　1. 임 금
　　2. 사업체 규모
　　3. 전공 일치도
　　4. 소 결
　제5절 고등교육 이전 단계의 지역 간 교육격차
　　1. 지역별 고교 졸업자의 대학 진학지역 선택행태
　　2. 성장단계에 따른 수능점수의 지역별 격차
　제6절 지방대학 재정지원의 적절성과 개선방향
　　1. 지방대학 재정지원의 적절성
　　2. 지방대학 지원정책의 개선방향
　　3. 정부 간 역할 정립과 지방대학의 과제
　제6절 결 론
참 고 문 헌

제９장 수도권 규제에 대한 재인식과 정책 전환
　제1절 서 론
　제2절 수도권 규제의 전개과정과 현황
　　1. 수도권 규제정책의 전개과정
　　2. 현행 수도권 공간계획 체계와 근거 법률
　　3. 수도권 규제의 현황
　제3절 수도권 규제의 평가
　　1. 기본전제와 정책목표의 타당성
　　2. 계획기능의 효과성
　　3. 정책목표의 달성도
　　4. 규제의 부작용
　제4절 수도권 규제개혁의 원칙과 방향
　　1. 기본원칙
　　2. 추진 방향
　제5절 결 론
　참 고 문 헌

제１０장 지역개발지수의 산정
　제1절 서 론
　제2절 낙후지역 판단기준 현황
　　1. 한 국
　　2. 외 국
　　3. 종 합
　제3절 새로운 지역개발지수의 산정
　　1. 접근방법
　　2. 지역개발지수의 산정
　제4절 맺음말
　참 고 문 헌
　<부록 1> 분석결과의 적절성 검토
　<부록 2> 지역낙후도 순위에 관한 설문조사